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I import and sell lozenges that dissolve in the mouth to ease

Customer Question

I import and sell lozenges that dissolve in the mouth to ease dry mouth. They are a registered class 1 medical device and have a CE mark. Do I need to pay VAT upon import, and do I need to charge customers (patients) VAT?

FYI Prior to getting a CE mark I used to import them as "Products for Oral and Dental Hygeine HS ********** .

Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.

Hello, I'm Keith and happy to help you with your question.

Here is the Gov UK guidance on the subject:

'When can goods being provided on prescription be zero-rated for VAT purposes?

The supply of drugs, medicines and other items for personal use of patients can be zero-rated only if all the following conditions are met:

  • the supply must be of ‘qualifying goods’ - see 3.2.1 below
  • the goods must be dispensed to an individual for that individual’s personal use
  • the goods must not be supplied for use for patients while in hospital or in a similar institution or administered, injected or applied by health professionals to their patients in the course of medical treatment
  • the goods must be dispensed by a registered pharmacist or under a requirement or authorisation under a ‘relevant provision’ - see 3.2.2 below
  • the goods must be prescribed by an appropriate ‘relevant practitioner’ - see 3.2.3 below.

You would appear to fall foul of last two conditions not to mention the preamble and your lozenge sales would appear to be standard rated. You should be selling with VAT at 20%.

You can find full details of this here:

https://www.gov.uk/government/publications/vat-notice-70157-health-professionals-and-pharmaceutical-products/vat-notice-70157-health-professionals-and-pharmaceutical-products#pharmaceutical-goods-supplied-with-or-without-medical-treatment

On import HMRC may charge both imoprt duty and VAT. The former you must absorb as a cost of sale and the VAT may be reclaimed as input tax. HMRC may not, of course, levy either.

I do hope I have been able to shed some light on your question. Businesses need not be registered for VAT until the turnover in a year reaches or approaches 81K.

bigduckontax, Accountant
Category: Tax
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.

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